Emirates NBD Research
 

Find anything about our articles and more.
Enter a query in the search input above, and results will be displayed as you type.

Try typing "Dubai Economics", "Dubai GDP", "GCC Macro"

Emirates NBD
Search
Subscribe
   
  • Home
  • Economics

    Emirates NBD Research provides detailed coverage of 16 GCC and MENA economies, analysing them from a top down macro and strategic perspective as well as by a bottom up sector by sector approach.

    • SUBTOPICS
    • GCC Macro
    • MENA Macro
    • Global Macro
    • Sector Economics
    • Monthly Insights

     

    Latest Article Dubai PMI: Higher input costs squeeze margins in March
    Latest Article Lebanon outlook
    Latest Article Economic Calendar 29 March

     

  • Markets

    Emirates NBD Research publishes reports on global forex, rates and commodities, as well as regional fixed income and equity markets.

    • SUBTOPICS
    • Foreign Exchange
    • Fixed Income
    • Commodities
    • Equities
    • Monthly Insights

     

    Latest Article Metals markets to benefit from vaccines and stimulus
    Latest Article OPEC surprises again
    Latest Article OPEC to stick to lower output levels

     

  • Daily
  • PMIs

    Emirates NBD sponsors Purchasing Managers’ Indices for the UAE, Saudi Arabia, Egypt and Dubai. The indices are compiled by IHS Markit, the leading global provider of financial market data.

    • SUBTOPICS
    • UAE PMI
    • Saudi Arabia PMI
    • Egypt PMI
    • Dubai PMI
    • Methodology

     

    Latest Article Dubai PMI: Higher input costs squeeze margins in March
    Latest Article UAE PMI improves in March, but global supply constraints are raising input costs
    Latest Article Dubai PMI rose in February

     

  • About Us
  • EmiratesNBD.com
  • Subscribe
COMMODITIES > MARKETS

Fear of lockdowns returning weighs on oil

Edward Bell - Senior Director, Market Economics
Published Date: 27 September 2020

Facebook
Linkedin
Twitter
Email
Print

 

Oil prices lost ground last week thanks to persistent fear that oil demand will fail to recover strongly as countries need to reintroduce restrictions related to Covid-19. Brent futures fell 2.8% over the week to settle at USD 41.92/b while WTI closed at USD 40.25/b, a loss of just over 2%. Confirmed virus cases are accelerating in European economies, forcing new lockdown measures as the total number of global cases has pushed above 33m. Despite the daily death rate having been relatively steady since June—even as cases have been rising—governments globally have kept markets, including commodities, on edge with the risk that new lockdowns would need to be introduced.

Saudi Arabia hosts a meeting of G20 energy ministers today with a focus on both the oil market and how to allow for a green recovery to the Covid019 pandemic. This is the second ministerial meeting of the G20 this year after a session in April when OPEC+ countries were pushing other producers—such as the US, Canada and Brazil among others—for a firm commitment to cutting output to save oil prices which were then in freefall. We don’t anticipate there will be much in the form of policy direction as a result of the meetings underway with many government outside of OPEC+ not eager to see higher oil prices at a time when most economies are either still in contraction or in extremal fragile recoveries. A strategy focusing on a green recovery may also need to wait for the outcome of the US presidential election: a Joe Biden victory would likely see stronger US commitment to international green economy objectives while a continuation of the Trump administration would mean an extension of the status quo of non-participation in COP 21 (Paris Agreement) targets.

Forward curves in both Brent and WTI remain soft with the 1-2 month spread in both contracts holding onto recent weak levels. Front of the curve spreads in WTI closed at USD 0.26/b while in Brent they are deeper at USD 0.49/b. The weaker conditions around the Brent market at the moment likely reflect uncertainty over whether Libyan production will return to markets in a significant way over the coming months. Libya’s National Oil Corp. has opened several export terminals to allow crude to flow back out to markets and said production would rise to 260k b/d from around 100k b/d at present. The Dubai swaps curve remains in contango although it has been oscillating closer to the neutral level: 1-3 month spreads in Dubai swaps closed at USD 0.34/b in contango at the end of last week.

Investors added net length in crude futures and options last week for the first time since mid August. Both contracts are on track for a monthly closer lower so there may be an element of investors buying in anticipation of at least a modest recovery back to the mid USD 40/b range. However, speculative net long positions as a share of open interest don’t show much conviction in an upside for oil: net length holds 3.3% of total open interest in the Brent market, around half its level from July, while WTI speculators are holding almost 13% of total open interest, roughly flat on where it has been in the last few months.

Written By:
Edward Bell, Senior Director, Market Economics

RELATED ARTICLES

Metals markets to benefit from vaccines and stimulus
05.04.2021

OPEC surprises again
04.04.2021

OPEC to stick to lower output levels
31.03.2021

OPEC and allies to keep oil market hot
07.03.2021

Oil at 100: No.
02.03.2021

See all

LATEST ARTICLES

Dubai PMI: Higher input costs squeeze margins in March
11.04.2021

Lebanon outlook
08.04.2021

Morocco outlook
08.04.2021

See all
 

 Subscribe to our newsletter


Never miss out what is going on in UAE Economics

KEEP READING MORE

Dubai PMI slips to 49.9 in October

Business optimism at series low of 50.6.

PMIS, ECONOMICS - 09.11.2020

WFH adoption will pose challenges to policymakers

The Covid-19 crisis has accelerated the transition to more remote patterns of working, which poses fundamental questions regarding not only how we will work in future, but equally how we will live.

ECONOMICS, GLOBAL MACRO - 11.03.2021

CBE keeps rates on hold

The Central Bank of Egypt kept its benchmark rates steady at its March 18 MPC meeting, the third consecutive hold.

ECONOMICS, EGYPT - 21.03.2021

 

OPEC and allies to keep oil market hot

We now expect oil balances to be tighter and prices to be higher

MARKETS, COMMODITIES - 07.03.2021

GCC budget deficits to remain substantial even as economic outlook improves

Oil price will remain below GCC budget break evens in 2021 and sovereigns will need to issue more debt to finance budget shortfalls.

ECONOMICS, GCC MACRO - 17.02.2021

CBE keeps rates on hold

The Central Bank of Egypt kept its benchmark overnight deposit rate on hold at 8.25% at its February 4 meeting.

ECONOMICS, EGYPT - 07.02.2021

UAE: A mixed bag of data in January

The data released this month supports our view of a 6.9 percent contraction in 2020, but there is reason for optimism.

ECONOMICS, GCC MACRO - 21.01.2021

  • Economics
  • Markets
  • PMIs
  • About Us
  • Subscribe to our publications
  • Economics
  • GCC Macro
  • MENA Macro
  • Global Macro
  • Sector Economics
  • Markets
  • Foreign Exchange
  • Fixed Income
  • Commodities
  • Equities
  • PMIs
  • UAE PMI
  • Saudi Arabia PMI
  • Egypt PMI
  • Dubai Economy Tracker
  • Methodology
  • About Us
  • Subscribe to our publications

 


Terms and Conditions
Copyright © 2021 Emirates NBD Bank PJSC. All Rights Reserved